How SMS chat can increase self-service payments within collections

The power of SMS

Don't underestimate the power of the humble SMS - especially conversational SMS chat used as a customer payments channel, particularly powerful in retail banking and utilities, as one case study showed:

• There are plenty more instances where SMS has improved collection rates, and in this blog, I will look in detail at one specific case where SMS was used to increase self-service payments when Direct Debit levels plateaued.
• Why don't customers sign up to Direct Debit?
• Of course, ideally you want your customers to pay via Direct Debit (or your local equivalent payment method), but the reality is some customers just won't respond to this strategy and there is a need is for a complementary digital approach, rather than just high effort (and cost) manual payment options. In fact, many organisations we engage with at arum have reported for several years that Direct Debit sign-up (as a key KPI) has plateaued in their more challenging segments.

There are multiple factors that could account for this customer resistance to Direct Debit, and many may well be associated with COVID and non-COVID related changes in working and income patterns/shocks. These include:

• Fixed payment structure: the debit is only available on a set day (or few days) of the month, which is seldom personalised to the customer, easy to forget, not based on when funds will actually be available, and difficult to change.
• F ees charged by the originating bank: this is typically between £5 and £25 each time a payment is returned, and only needs to happen once or twice to impact future customer behaviour.
• Inevitably then, the millions of customers that don't go onto Direct Debit opt for manually-orientated payment methods (phone or online, following receipt of a letter), which require maximum effort from the customer and lead to delayed payment and operational collections costs for the service provider.
• How can SMS chat help with faster payments and increased customer satisfaction?
• One complementary payment channel to Direct Debit is SMS chat. By implementing something like the example outlined below, you can expect to continue to report your existing Direct Debit levels, e.g., c.60-90% plus c.15% on SMS as a payments channel.
• Why is SMS chat so successful as a payments channel?